Estimating a project’s cost is one of the most important steps in the construction bid process. While estimating costs for supplies, equipment, subcontractors and payroll can feel overwhelming, a construction estimate template can make the process much easier.
Some complicated or expensive projects may require hiring a professional estimator. But for most projects, making a cost estimation yourself isn’t as difficult as it may seem — as long as you know what you’re doing. Luckily, our super simple step-by-step guide to writing a construction estimate is here to help.
The easiest way to create an accurate estimate is with a template. We’ve created downloadable construction estimate templates that can help you present a clear budget estimate for any project you may have.
Construction Estimate Templates
Because professionals use estimate documents to create project budgets, an accurate estimate can help secure adequate funding for a project and prevent future funding delays. Mistakes in your estimation will cost you down the line, so it’s best to use a pre-formatted construction estimate template like the ones we’ve included below.
Construction Estimate
Contractor Estimate
Hourly Work Estimate
What Is a Construction Estimate?
A construction estimate is a document that breaks down the anticipated cost of a construction project. Project owners need these estimates to budget properly for the project, ensure a robust return on investment (ROI) and evaluate potential financial risks.
Some companies will hire a professional estimator to develop their construction estimate. The American Society of Professional Estimators (ASPE) is the oldest and largest organization of professional construction estimators. In some cases, especially if you’re making an estimate to determine the price you plan to bid on a particular contract, hiring a professional estimator can actually save you money.
What To Include
A good estimate provides a budget that is almost identical to the total cost at the end of the project. In order to ensure your estimate comes as close to the final cost as possible, you’ll need to calculate all expenses that will be incurred throughout the project.
This involves outlining the scope of the work required and breaking down the individual supplies, tools, labor and any other costs necessary to complete the project as described.
Below we’ve broken down each of the sections you should include in your construction estimate:
Start and End Date
Before recording anything else, make sure to write down the project’s estimated start and end date. This gives an estimated timeline for how long construction will last and shows that you have outlined the project from start to finish.
Description of Work
When laying out what the job will require, try to be brief and to the point. The purpose of this section is to give a general overview of the proposed work. You can save the specifics for the following sections, where you’ll go into each requirement and its costs in detail.
Direct Costs
After summarizing the project, you’ll begin detailing the project’s expenses beginning with direct costs. Direct costs are those that are directly tied to the physical development of the project. There are three main direct costs that should be included in every construction estimate:
- Cost of labor
- Cost of materials
- Cost of equipment
Indirect Costs
Indirect costs include any expenses that aren’t directly related to the project’s physical construction. Indirect costs can include:
- Worksite security
- On-site construction offices
- Worksite utilities (gas, electricity, telephone, internet, etc.)
- Licenses and permits
- Administrative costs
- Legal fees
Tax Rate and Grand Total
It’s important to show an estimated grand total in order to be as clear and open as possible. The total should include everything from miscellaneous necessities to projected material costs and incorporate the estimated tax rate. Tax rates will vary by location, so it’s important to research your local rates before completing this section.
Contingency Budget
Unforeseen costs are almost inevitable in construction. No amount of planning and preparation can predict costs incurred by delays, weather, change orders, crew illness or other extenuating circumstances.
This is why it’s important to include a contingency budget in your estimate. A contingency budget is like insurance in case of unexpected circumstances that may cause increased costs. Typically, your contingency budget should be at least 15% of the overall estimate and will only be used in case of unforeseen circumstances.
Signatures
Both you and the client will need to sign and date the document once all estimates are finalized. This shows that all parties have seen and agreed on the estimated project budget.
Types of Construction Estimates
Construction estimates are different depending on when they’re made. The ASPE categorizes the different types of budget estimates into five “levels.”
- Level 1: Order of Magnitude — An extremely rough estimate that’s created before the project is fully defined. It’s determined solely based on expert opinion and previously developed project costs.
- Level 2: Intermediate Estimate — Used to determine whether a project is feasible given a particular budget. Large-scale projects will use this kind of estimate to decide whether to abandon a project that may be unaffordable.
- Level 3: Preliminary Estimate — Used as the foundation of a project budget. Some projects can be approved based on a preliminary estimate alone, so it’s important to make sure everything is correct.
- Level 4: Substantive Estimate — More thorough than a preliminary estimate, a substantive estimate is created by analyzing detailed project objectives, designs and deliverables that have already been finalized.
- Level 5: Definitive Estimate — This is the most accurate estimate, as it occurs after all suppliers and subcontractors have submitted quotes. However, it’s important to note that this is still an estimate and the budget is subject to change based on any development.
Starting a project with a thorough, accurate cost estimate will set the tone for the rest of your contract. Taking the time to record a full list of every required expense will ensure you have everything you need ahead of time, preventing costly delays and frustration for both your client and your crew.
If an estimate is too high, the project owner may balk at the cost. If it’s too low, the competency of the contractor may be called into question. Likewise, the estimate should be written in a way that’s clear and understandable to all stakeholders in the project, including the client.
Using a construction estimate template can help ensure that each recorded cost is clear and easy to understand and meets a project’s individual needs. A polished estimate communicates to the client that your services are high quality and professional down to the last detail.
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